This Makes My Day -- The Light-Heavy Spread -- August 3, 2021

This is really cool. Yes, I know. I need to get a life. But periodically I make comments that not all oils are created equal. In fact, earlier today, I referenced that by noting that although WTI dipped below $70, something called Louisiana Light was solidly above $74. See subject line here. 

Well, here we go.

This is awesome. From S&P Global Platts today: Phillips 66 sees wider crude quality differentials going forward.

• Summary:
• light-sweet spreads widening;
• distillate demand to rise;
• more refinery shutdowns expected
• From the article:
• Phillips 66's record second-quarter chemical results were countered by poor refining segment results, due in part to high RINs costs, weak market capture and narrow light-heavy crude differentials, company executives said August 3, 2021.
• Phillips 66 ran its refineries at 88% of capacity in the second quarter, up from first quarter's 74%, but posted lower margin capture quarter on quarter on its distillate-focused refinery configuration.
• More:
• The increase in heavier crude supply, due in part to higher production quotas agreed by OPEC+ members, will benefit distillate-heavy Phillips 66. The company, which runs a lot of heavy crude, will benefit from the widening of light-heavy crude differentials.
• "For the second quarter, it was a gasoline-driven market without much differential on heavy crude," said Robert Herman, Phillips 66's head of refining. "We've seen those widen out here now in July to a much more respectable level."
• So far in the third quarter, US light sweet Gulf of Mexico benchmark Light Louisiana Sweet is holding a $2.59/b premium to US Gulf of Mexico medium-sour Mars, according to S&P Global Platts assessments.

At the linked article, a graphic: light-heavy crude spreads widening; the LLS - Mars spread:

• August, 2020: 50 cents;
• January, 2021: $1.50
• February/March, 2021: $2.80
• currently: $2.80

Mars?

• S&P Global Platts -- the "periodic table of oil." Third iteration here, December 10, 2020. May take a moment to download.

If you've read this far, this is what the Keystone XL was all about. Unfortunately this was a subject too difficult to understand by policy makers in Washington, DC.